ReachNow’s Launch Falls Short

[Clarification: the post states that carsharing vehicles have “the right to park…in any legal parking spot at no charge”. While users do not pay for street parking at the point of use, the city does charge a flat annual fee of $1,730 per vehicle, amounts are adjusted annually based upon actual usage, and such fees are built into member pricing. – Zach]

Back in 2013, when Daimler launched its Car2Go carsharing service in Seattle, I lamented the fact that the Car2Go service area (the boundaries where cars can be parked and left for the next customer) stopped short of serving West and Southeast Seattle—two areas with diverse populations and, tellingly, more lower-income people than the Central and North Seattle neighborhoods Car2Go did serve first. At the time, I expressed some incredulity that Car2Go considered neighborhoods like Mount Baker and Columbia City “new and developing areas,” which struck (and strikes) me as code for “places that aren’t mostly white yet.”

Car2Go eventually expanded its service, and in 2015, the city adopted legislation that increased the number of “free-floating car share” permits that also required all new carsharing services to expand their service areas to include the entire city within two years. The implication was clear: If the city is going to give your members the right to park your cars in any legal parking spot at no charge[see note above], you have to serve the entire city, even the parts that may be less white—and less lucrative.

BMW’s new ReachNow service launch shows the wisdom of that rule. ReachNow, which costs 49 cents a minute (to Car2Go’s $0.41), has an initial service area virtually identical to Car2Go’s, excluding all of West Seattle and Southeast Seattle and stopping just a couple of blocks south of I-90, at S Lander St. ReachNow has two years to expand its service area to include the whole city.

Reach Now CCO Sandra Phillips says the company launched “with an initial fleet of only 370 cars [according to the city, 363-Ed.] and a more compact home area to ensure that our members have access to a vehicle when they need one,” and said they’ll expand once they get a larger fleet. She did not respond to questions about why ReachNow’s “compact home area” extends all the way up to Northgate while excluding the entire southern half of the city.

Contacted by email, Car2Go Seattle general manager Michael Hoitink said basically the same thing, describing his company’s very similar initial home area, which extended as far north as Bitter Lake and Broadview, and included many of the North End’s iconic single-family neighborhoods, as encompassing “the downtown core and surrounding areas where population density is the highest.” He continues, “We’ve learned that when looking at the size of a free-floating Home Area, it’s important to consider factors like demand and mobility patterns to ensure vehicles are available where there’s demand, and that vehicles aren’t getting “stuck” in lower-demand areas.” In Seattle’s case, one of the places the company didn’t want its cars getting “stuck” in was the entire Rainier Valley.

City council president Bruce Harrell, whose council district (2) encompasses Southeast Seattle, told me in an email that while he knows ReachNow will expand to serve the whole city in two years, “I am disappointed they are not serving Southeast Seattle in this initial rollout. In speaking with new startups and businesses looking at the Seattle market, I have emphasized to them that they should embrace the diversity of Southeast Seattle. … I will reexamine the current car-share ordinance and Director’s Rule to ensure we have the strongest equity policy for our car-sharing programs. I am also in the process of contacting BMW to impress upon them the policy reasons we pushed to have Car2Go in Southeast Seattle and to convey to them our community’s interest in having their presence in our community.”

ReachNow is different from Car2Go in at least one way (other than the size of its German-designed cars): Its user agreements include a provision allowing ReachNow to change the price based on user demand, a practice commonly known as “surge pricing.” Prices would be highest when demand is highest, such as rush hours and holidays. Since ReachNow charges by the minutes, this practice would be especially lucrative during times of high traffic congestion, when drivers are more likely to be stuck in traffic. And ReachNow, unlike Car2Go, doesn’t have a per-hour price cap; their price caps start at three hours ($50), and go up to 12 and 24 hours.

Phillips didn’t respond to questions about the potential that surge pricing will mean major (and perhaps unexpected) price hikes for ReachNow customers, but did say the company had no immediate plans to implement surge pricing. ”
We included the potential for variable pricing in our membership agreement as it could be implemented down the road as our service grows and user demand increases,” Phillips said. “And, while we are currently evaluating options, we don’t have specific details to share about what that may look like or when it may be implemented.”

SDOT’s Norm Mah says the city has no law regarding surge pricing by carsharing services. Uber, which charges more during periods of high demand such as New Year’s Eve, is currently defending itself in a class-action lawsuit charging that Uber’s CEO conspired to drive up prices. Car2Go does not include a surge-pricing provision in its user agreement.

52 Replies to “ReachNow’s Launch Falls Short”

Looks perfectly reasonable to me. You get into politicians micromanaging this sort of thing and you get Pronto: a failure.

And honestly, the surge pricing makes sense. You can imagine it being used as a carrot as well as just a stick: drop the car off within walking distance of a Link station and get a discount, ensuring more cars are easily accessible for last mile transit connections.

Yes, a non-profit dependent on a whole bunch of city agencies to determine where they’d be allowed to site stations (SDOT, Parks, etc) to the extent that they might as well have been directly owned and operated by the city. They had all the disadvantages of municipal control and none of the leverage. Look, for instance, at them getting rolled by the Market PDA over ‘advertising’ or by the geniuses who put a war memorial on the busiest street downtown and complained that the bike station was ruining the tranquility.

The city didn’t make them spread out stations all the way from downtown to u district. The city didn’t force them to spend a ton of money on helmets (king county did). The city didn’t make them start downtown, where there’s no good bike infrastructure, vs other places which are more bike-friendly. The city didn’t make them pick a pricing scheme that dissuades people who just want to try it out.

Do we know how much Car2go usage is in South Seattle (as opposed to other neighborhoods)? If it is average or more than average, that suggests Reachnow should have expanded there. If it is less than average , then it is understandable (which is presumably why there is no reach in car-necessary places like Magnolia).

The bad news is that as of about 11:30 AM the BMW’s are clustered around Amazon. The good news is that there are a couple of Car2Go vehicles on Capitol Hill during the day! Maybe someday there will be a good balance. Like when all the parking spaces in SLU are full of car share cars.

If done right, demand-based pricing could help considerably with maintaining a good balance of vehicles all over the city – drive from Green Lake to SLU at 8 AM on a weekday morning, you pay a surcharge – drive from SLU to Green Lake at the same time, you get a discount. Of course, a blanket surge pricing over the entire city wouldn’t really help much with the balancing issue. Also, of course, drivers who take the cars out during rush hour already pay a surcharge, since every minute stuck in traffic is another 49 cents.

Sure, but I wasn’t really making any comment at all about surge pricing. In the uncorrected version of the article, Erica seemed to be reasoning that because the city provided free parking, it’s reasonable to insist on complete coverage from the car-sharing companies. But that premise was wrong. It was somewhat of a strange way to construct that argument anyway – the very fact that these car sharing businesses are running their entire business on public infrastructure gives the city the right to require whatever they want as part of licensing.

Do people consider the lack of non-app access an equity concern? I asked ReachNow if there was a way to use their service without installing an app on my smartphone. They said there is not.

If I can’t afford a smartphone, or my smartphone is broken, or I use a non-supported smartphone OS, or any number of reasons – I can’t use ReachNow from my computer or from a library computer. Is this not a concern for the city?

I agree, only limiting the service to smart phones is severely lacking. One of the things that I was most excited about the launch was the bigger cars. This opens up new trips for families and groups of people that weren’t available with Car2go.

The city should think about including minimum access requirements to the service (as well as requirements that the home area includes the entire city) so that everyone can actually use it.

Car seats would be tricky, just because there is no one car seat for a kid (you need a different one for the weight of the child). So now you are putting a couple car seats (or more) in the trunk (or back seat) of every car, which would be kind of a mess.

I think the traditional car rental places as well as ZipCar would make more sense for this. ZipCar rents out different models of cars, including vans, so it is handy if you need to move something. Being able to rent a car with a particular size set of car seats would be really handy. Just as some of the traditional car rental places have followed ZipCar (and offered hourly rentals) I could see them doing the same as well (if they don’t already).

Does the model really work as far as locating cars without a smartphone from libraries ? Just for example of One Bus Away, it seems like the equity issue on many fronts best served by subsidizing very basic smartphone maybe ?

I use OneBusAway from a desktop browser all the time, and I also have a smartphone. I have also used zipcar from a desktop browser. If I didn’t have a smartphone, I’d still use these services from just a desktop.

I normally use OneBusAway from my smartphone, with one exception. For the trip home work, I use the big screen on my work computer – with the stop I use pre-bookmarked, it is much quicker and easier than taking my phone out of my pocket. That said, with car sharing is much more sporadic, and the locations I’ll be requesting it from much more random, I don’t envision ever using ReachNow without my phone.

When I’m out and about and my phone’s battery dies, Metro’s frequent network becomes very much appreciated – without access to OneBusAway, the frequent network constitutes the set of routes I am willing to trust.

Actually, there has research reported about how cell phones are just as common in communities of color than with old, retiree white people. When a person can’t afford am extra laptop or tablet, they default to the smart phone.

I don’t see why it would, a $10 prepaid Android from the 7-11 can access the app through the library’s wi-fi. The Obamaphone subsides are changing to cover data this year. There’s little reason to treat mobile as the ‘premium’ way to access anything these days.

I’ve volunteered a few times in the homeless shelter near me. There are an awful lot of services for the homeless that work far better if accessed on the web. It’s unfortunate, but even those who can’t afford an internet connection have to have one.

The good news is that they have been around long enough that you can get some not-too-bad ones on the used market for the $10-$20 range. Not sure what the cheapest thing is that will work with Car2Go or ReachNow, but I imagine if you don’t want to spend a lot you can figure something out.

Given the pricing for Car2Go and ReachNow I think anyone who can afford ether service can probably afford a smartphone and the associated service for it.

More likely to be a factor as to why someone doesn’t have a smartphone are:
1. Uncomfortable with technology.
2. Distrustful of technology. Often tech savvy, they avoid things like smartphones because of distrust of various aspects of the technology such as location tracking. (One person I know has a dumb phone so he’ll stay off the internet when he is away from home and work).

There are plenty of car2go near me in NE Seattle, but I finally dropped my membership as I’m not at all interested in parking anything at all downtown, Ballard, Fremont etc

Is anyones looking at a someday service for utilitarian autonomous vehicles ? I suspect that beyond remedying the social inequity that worrying about vehicles clustering in Rainier Valley promulgates, Rainier Valley and citywide seniors are the ones that would most benefit from something that’s a completely hassle free “one seat ride” door to door that rarely parks (itself) at all

I don’t like parking downtown either, but if somebody else has already done the work to park the Car2Go downtown for me, driving it from downtown to NE Seattle is relatively easy. Same for Ballard, Fremont, etc.

Did “dropping” your membership have any advantages? I didn’t think there was an annual fee. Even if you have no plans to use the service it seems like it would be a good option to have in the toolbox in case of emergencies.

Why the negativity? Aren’t we glad there’s another carsharing service, limiting its risk to start, and setting the stage for its long-term success?

Launching a new service actually isn’t easy. It’s helpful to start small, figure out how the operations actually work, and expand from a successful base. As you note, this is the approach car2go took; and incidentally, it’s how most new services are launched these days.

If you set “serve the entire city” as the bar for launch, you’re making it more likely for services like this to fall on their face because they weren’t allowed to start small.

I don’t really see the problem. I mean, yes, it would be better for people in the Rainier Valley if the service was provided there, but it seems like a case of making perfection the enemy of the good. The service increases mobility, reduces parking demand, and encourages car-free living – and it will reach the RV in the near future.

I don’t think there is anything wrong with BMW, which is trying to run a viable business, deciding to concentrate their cars in a smaller area to make it more likely that a car is nearby and improve the experience – reaching a critical density of cars is critical to car share’s success. And the current fleet of cars is worth about $16 million – that’s a pretty big bet they’re taking on this endeavor – do we only want to have car sharing if they’re willing to pay $30 million to start it?

And I don’t think we should change the law here, either. Maybe a tweak, but on the whole, inviting businesses to set up car sharing, allowing them to start by concentrating cars where they think they’re most likely to be able to make it work as a business, and then requiring that they cover the whole city after a couple of years – this seems eminently reasonable. If you made it harder, you’d push out smaller companies that might have an innovation in car sharing, but don’t have the capital to cover the whole city at once.

My gripe is that the city limits each service to 750 vehicles. On the whole, that’s just not a lot of cars – it isn’t at all a stretch to imagine that if there were 1500 vehicles, you’d be that much more likely to have one near you when you wanted to, and you could easily get an additional 750 people to live car-free. I know so many people who own a car for a once-a-week trip to Fred Meyer or that friend’s house that’s two hours away by bus.

When services like this deliberately exclude parts of the city with more minorities and with a lower median income, that is in fact an equity issue. The city issues these permits, and they are right to require some measure of equity in exchange for companies like BMW and Daimler being able to operate and make money here. Using your “don’t make the perfect the enemy of the good” model, why not just restrict transit service to people who can provide a valid credit card, thus ensuring zero fare evasion?

Erica, I think its reasonable to allow a period of time when a free floating car sharing company can limit where the cars are allowed to be parked, before the operator is required to allow city wide parking. I could see arguing for a one year instead of a two year limit for going city wide, but these things take a little bit of time to figure out. Phasing a business to some commuters is a recognized way to roll out new things.

Although regarding the credit card bit which you sort of allude to in the other piece, free floating car sharing companies should have to take cash in some form. (This might be stored value cards at Bartells and QFC, allowing money transfers to put stored value on the account, I think just accepting cash at their downtown locations is a little too limited though.) Yes, credit and debit cards do have a risk that the provider wont be able to charge the card and won’t get paid, just like cash would here.

It seems like this service has the potential to be a popular alternative at the Magnolia Cruise Ship Terminal, but I don’t know how that would work as there already seems to be a herd of buses and taxis that hang out down there.

One opportunity BMW missed that would have been really good for building up the user base would be to add at least one or two big destinations to their home area that are outside the Car2Go’s home area. Business-wise, I think there would be considerable value in doing something that the competition doesn’t do, rather than merely chasing after the competition. SeaTac airport and downtown Bellevue are two places outside Seattle that immediately come to my mind with regards to car-sharing potential, but there are others.

Long-term, I think it would be very useful to see free-floating car-sharing expand beyond Seattle into more of the neighboring cities. Even if outside of Seattle, the only places served were P&R lots, shopping centers, and the Microsoft campus, it would still have value. For instance, you would definitely see people driving them from downtown to Eastgate P&R who just missed a 554 and don’t feel like waiting 30-60 minutes for the next one.

From a public agency perspective, Metro and Sound Transit need to be supportive of this. In particular, if the agencies are willing to spend billions of dollars on parking facilities, the least they could do is allow car-sharing vehicles to operate out of them.

The satellite destination bit would work, if there was guaranteed parking there.. This is one of the things ZipCar OneWay is working on. It’d royally suck if you drove all the way to the Eastgate P&R, but couldn’t find a parking spot, so you had to drive it back to Seattle and wait for the bus, and pay for the car trip to nowhere.

Very good point. I think for satellite lots, you would definitely need a system where you reserve your parking spot at the end of the trip before you even begin your trip. But, that should be a solvable problem.

Having these sorts of short term rentals in park and ride lots would be huge. For example, I have a friend who works downtown, but visits his dad in suburban Tacoma every Tuesday. He rides the bus (or train) every other day to work, but on Tuesday’s he drives. He hates it, of course. He has to slog through traffic to get downtown, then slog through traffic to get to Tacoma and finally to his Dad’s. If he could grab a Car2Go (or FlexCar or something similar) at a Tacoma Park and Ride, his day would change dramatically. He would take buses (or trains) and only drive the part that really isn’t served well by transit.

I agree, I would say it is more classism than racism. A look at the last census map (http://www.seattle.gov/dpd/cs/groups/pan/@pan/documents/web_informational/dpdd016866.pdf) shows that while Rainier Valley has a high percentage of African American residents, so too does the Central Area*. My guess is that gentrification has not gone alone with a change in racial makeup. In other words, the C. D. has gotten wealthier faster then it has gotten whiter. More to the point, the lines drawn by BMW don’t seem ridiculously skewed towards avoiding people of color — it would be very different if they drew the line at Madison, for example.

Looking at it from a density standpoint (http://arcg.is/1MFKyEU) the borders seem skewed towards class, but not by a huge margin. I would probably make the coverage area a bit narrower, but longer. If I was BMW, I would be a bit worried about someone leaving a car at Golden Gardens (e. g. meeting someone there, then getting a ride back). East of 35th, there are plenty of places (Windermere, View Ridge) which seem ripe for “getting a car stuck” (Windermere especially, since it is full of hard to walk cul-de-sacs). I would then extend this out to the city border, as well as down Rainier Valley. Neither seems like a place where a car would get stuck. Maybe at Seward Park, but everywhere else it seems like there are plenty of people who could walk to a car no matter where you put it. West Seattle, meanwhile, seems like an area that is full of places where a car could sit a long time without being used (it is like much of Magnolia).

* To be clear, the entire Central Area (including Capitol Hill) is a lot whiter than it used to be, but there are plenty of areas north of I-90 with relatively high minority populations.

I think a key part of your conclusion is based on outdated data (as you acknowledge). That census data was from 2010. I think we all realize that the last six years have seen enormous changes across Seattle, but particularly in the makeup of residential populations in the Central District and Rainier Valley. One only has to stroll down Union, past Chuck’s, Electric Lady, and Uncle Ike’s, to get a feel for the changes this neighborhood have experienced in the past 2-3 years alone.

I have lived in SE Seattle (just north of Rainier Beach High School) for 10 years, and can relay those changes first hand.

I don’t doubt that BMW is thinking with their wallet, and that the business decision was predicated on predicted revenue rather than a goal to exclude minority populations. However, economic disparity and race go together like flies and fecal matter. To claim that decisions made on a class or economic basis don’t disproportionately affect historically lower earning racial groups is, quite frankly, observably and provably false.

By restricting service to more affluent parts of the city, you put economic and social brakes on desirability of un-served neighborhoods, in some ways a form of redlining. You make residents of those neighborhoods into second class citizens, and reduce the chances of further economic investment. The City controls and maintains the infrastructure that these services are dependent on. I think it’s only fair and just that the City uses whatever tools are at its disposal to promote equity.

I do agree that a new service can’t go from 0 to 60, to use the appropriately car-centric idiom. A phased roll out makes sense, and I look forward to ReachNow expanding to cover SE Seattle in the future. I just wish they didn’t have to be forced to cover this area, easily the most diverse, and one of the most vibrant and interesting parts of the city.

To the individual that questioned whether less affluent people would use this service, I absolutely think they would. In many ways, BMW is marketing this in aspirational ways, from the name of the service (“ReachNow”) to taglines like, “Your BMW. At least for today.”. Those marketing efforts make it clear that they are not just marketing this to people who can go out and purchase a BMW today, they’re also marketing it to people that aspire to do so.

The costs of the service also pale in comparison to car ownership, for occasional use. Maintenance and repairs, particularly of older, less expensive vehicles, can quickly add up to hundreds or thousands of dollars, typically without much warning. Add in insurance, gas, parking, registration, and other costs, and $0.49/minute seems downright reasonable.

Clarification to the correction above: Drivers can park Car2Go and ReachNow cars with no additional charge to them. In other words, they don’t have to pay the meter. Parking costs are paid for out of member usage fees.